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Updated 2: Defense expert questions tanker decision

Loren Thompson, the well-regarded defense analyst with the Lexington Institute think tank, has taken heat from Boeing backers over his reports about the Air Force tanker decision.

But in his latest report, Thompson echoes many of Boeing’s concerns about the decision.

UPDATE: Analyst Scott Hamilton, who first reported on Thompson’s apparent change of position on the tanker debate, speculates about why. You can read Scott’s comments here.

Here is my report:

By James Wallace
P-I aerospace reporter

It’s time for the U.S. Air Force to explain in far greater detail than it has why The Boeing Co. lost the tanker competition to the team of Northrop and EADS, a noted defense expert said Tuesday.

“Something is not quite right here,” Loren Thompson, defense analyst with the private Lexington Institute, a think tank, said in an interview.

In the past, Thompson has been widely criticized by Boeing supporters for being pro-Northrop on the tanker controversy.

But Thompson insisted he has only been reporting what Air Force sources have been telling him and he had not taken sides in the dispute over whose tanker is better. Thompson said he’s had three months since the tanker announcement to understand the issues and listen to all sides, and his latest report, which was posted on the Lexington Institute’s Web site late Tuesday, represents the “conclusions I have come to.”

The tanker selection process was hardly as “transparent” as the Air Force has claimed, wrote Thompson, who has close contact with senior Air Force officers.

“Whatever else this process may have been, it definitely was not transparent,” he wrote.
Boeing had been widely expected to win the Air Force competition with its 767 tanker, but instead the Air Force earlier this year picked Northrop and EADS, the parent of Airbus, to supply it with 179 tankers based on the far bigger and heavier Airbus A330 jetliner.

Boeing has filed a protest of the Air Force decision with the Government Accountability Office, the watchdog agency for Congress. The GAO has a mid-June deadline to decide the merits of Boeing’s protest. It would be highly unusual for the protest to be upheld.

But Thompson said even if the GAO finds that only small mistakes were made by the Air Force, given Boeing’s contention the competition was very close, such a finding might be enough for Boeing’s supporters in Congress to force the Air Force to hold another tanker competition.

Boeing claims the Air Force changed its tanker requirements to help the bigger Airbus plane win the competition. Boeing has argued the competition was “seriously flawed.”

Northrop has mounted an aggressive public relations campaign, issuing almost daily statements about why its tanker is better than Boeing’s. And Northrop has sharply criticized Boeing for suggesting the competition was unfair.

Previously, Thompson said Air Force leaders believe Boeing “is willfully misstating the facts in a bid to obscure the inferior performance of the plane it proposed.”

In the interview Tuesday, Thompson said he has been waiting for the Air Force to make a “slam dunk” case to him about why Northrop and EADS won. But The Air Force has not been able to make such a case, he said.

“I never really got what I would consider an analytical explanation for the outcome, so what do we really know about what happened?” he said. “It just doesn’t look good.”

In his latest report, Thompson said the Air Force has failed to answer “even the most basic questions about how the decision was made.”

“Whatever it finds,” he wrote of the GAO review of Boeing’s protest, “the Air Force has some explaining to do.”

Thompson made the following points in his report and the interview that he said raise serious questions about the Air Force decision:

— The Air Force claims it would cost roughly the same amount to develop, manufacture and operate 179 tankers regardless of whether they are based on Boeing’s 767 or the Airbus A330. But the Airbus plane is 27 percent heavier than Boeing’s and burns a ton more fuel per flight hour, Thompson said. “With fuel prices headed for the upper stratosphere, how can both planes cost the same amount to build and operate over their lifetimes?” Thompson said.

–The Air Force claims it would be equally risky to develop the Boeing and Airbus tanker. But the Airbus tankers will be built at plants in Alabama that do not yet exist, Thompson noted. Boeing’s tanker would be built on its long-running 767 assembly line.

It doesn’t make “common sense,” Thompson said, that the Northrop-EADS tanker production plan would not have greater risk than Boeing’s.

“This is not plausible,” he said.

–The Air Force has said the Northrop-EADS team received higher ratings on past performance than the Boeing team. But Thompson noted that Boeing has built all 600 of the tankers in the Air Force fleet and Northrop and EADS have never delivered a single tanker equipped with the refueling boom the Air Force requires.

“How can Northrop and Airbus have superior performance?” Thompson said.

–The Air Force has said a computer simulation of how the competing tankers would function in an actual wartime scenario strongly favored the larger Airbus plane. But the simulation assumed longer runways, stronger asphalt and more parking space than actually exists at forward bases, Thompson said, and the simulation failed to consider the consequences of losing bases in wartime.

“How can such unrealistic assumptions be relevant to the selection of a next-generation tanker?” Thompson said.

He also wrote in his report that the Air Force refused to consider Boeing cost data based on 10 million hours operating the commercial 767, and instead substituted repair cost on the 50-year-old KC-135 tanker. The Air Force also had said early on that it would not award extra points for exceeding key performance objectives, but then proceeded to award extra points, according to Thompson.

“Even now, neither of the competing teams really understands why the competition turned out the way it did,” Thompson wrote. “It would be nice to hear from the Air Force about how key tradeoffs were made, because at present it looks like a double standard prevailed in the evaluation of the planes offered by the two teams.”

Updated 2:

On Wednesday, Washington state’s U.S. Sen. Patty Murray weighed in on Thompson’s latest report. This was the news release just issued by the senator’s office:

(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) released the following statement after Dr. Loren Thompson, Chief Operating Officer of the Lexington Institute and a leading Defense contracting expert, published a series of outstanding questions he feels the Air Force must answer about their decision to outsource a $35 billion aerial refueling contract to Airbus. Mr. Thompson initially hailed the Air Force selection process, but as his recent article reveals, he has since joined Murray in raising serious questions regarding how the Air Force made their decision.

In Senate hearings since the Air Force’s decision was announced in February, Senator Murray has asked Pentagon officials including the Pentagon’s Comptroller, military construction officials, and Defense Secretary Gates for answers on concerns related to cost overruns, diminished capability, the safety of the Airbus plane, national security implications and job losses. Murray has received very little or no feedback from Pentagon officials to her questions.

“The more I find out about this contract, the more concerned I am about how it was awarded. While early reports attempted to validate this decision, it has becoming increasingly clear to the American people that the Defense Department did not award this contract fairly or transparently and they cannot justify what they have done.

“When I’ve asked why the Defense Department would ask Congress to pay for a tanker that is more expensive, less efficient, and less safe no one can give a straight answer. And when Dr. Thompson asks his friends in the DOD to provide a sound basis for awarding this contract on key issues like cost, risk, and past performance, it seems they can’t offer him an answer either.

“Congress and the American taxpayer need to know how and why the Department of Defense reached its decision to award this contract to Airbus. And we need those answers now.”

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